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President Barack Obama’s new federal budget proposal for fiscal year (FY) 2012 seeks $3.729 trillion in discretionary, entitlement, and interest spending. In the previous fiscal year, the president had proposed outlays of $3.83 trillion. As of January 2011, the Congressional Budget Office (CBO) now projects FY 2011 spending will end up at $3.708 trillion.
For reference, President George W. Bush proposed not only the first-ever $3-trillion U.S. budget, but also the first $2-trillion federal budget—in 2002, only nine years ago.
The result: Thanks to the bailouts and other amplified spending, CBO projects a FY 2011 deficit of a previously unthinkable $1.48 trillion, greater than FY 2010’s actual deficit of $1.294 trillion.4 With the unveiling of the 2012 budget, President Obama projects an even larger FY 2011 deficit than CBO does: $1.645 trillion. This figure will be the largest deficit since World War II, at 11 percent of the entire U.S. economy.
To be sure, many other countries’ governments consume a greater share of their national output than the U.S. government does. However, in absolute terms, the U.S. government is the largest government on planet Earth, whether one’s metric is revenues, expenditures, deficits, or accumulated debt.
Those costs fully convey the federal government’s on-budget scope, and they are sobering enough. Yet the government’s reach extends well beyond the taxes that Washington collects and the deficit spending and borrowing now surging. Federal environmental, safety and health, and economic regulations cost hundreds of billions—perhaps trillions—of dollars every year over and above the costs of the official federal outlays that now dominate the policy debate.
Economics 101 explains how and why firms generally pass along to consumers the costs of some taxes. Likewise, some regulatory compliance costs that businesses face will find their way into the prices consumers pay. Precise regulatory costs can never be fully known, because, unlike taxes, they are unbudgeted and often indirect. But scattered government and private data exist on scores of regulations and on the agencies that issue them, as well as on regulatory costs and benefits. Compiling some of that information can make the regulatory state somewhat more comprehensible. That is one purpose of the annual Ten Thousand Commandments report.